India’s central bank maintains policy rate amid $41 billion capital inflows but warns of external risks to the rupee.
The Reserve Bank of India left its benchmark repo rate unchanged at 5.25% for a fourth straight meeting, citing supply-driven inflation pressures and resilient domestic demand. The decision, backed by a unanimous vote, comes as USD/INR eased to around 95.10, supported by over $40 billion in foreign capital inflows, including $36.7bn via FCNR deposits and $2.57bn in other inflows.
The RBI trimmed its FY2026-2027 inflation forecast to 5.0% from 5.1% while raising GDP growth projections to 6.7% from 6.6%. Analysts noted the central bank’s neutral stance preserves policy flexibility amid lower crude oil prices and strong capital inflows, though risks from elevated US Treasury yields and geopolitical oil volatility persist.
Despite near-term support for the rupee, institutional analysts caution that external pressures could cap further INR gains against the dollar.